Uh N0 - More Bad News:
If buyers can get what they need, they're paying for it
By: Tom Stundza
Purchasing
March 4, 2004
Business has been improving for more than half of the buyers surveyed monthly since last autumn, but they say activity could have been even stronger lately if sufficient amounts of raw materials had been available.
"Availability is an even bigger issue than price," says a manufacturing firm's purchasing manager in Kansas. "And prices are getting ridiculous."
PURCHASING magazine's monthly survey of buyers puts the February business activity index at 67.8 (where 50 separates expansion from contraction), making the four-month average of 67.4 the highest since the survey was revised in January 1996. The 90-day buying plans index of 81.2 in the February survey is the highest on record, which probably reflects that orders have strengthened for many products (see sidebar). Even the long-depressed aerospace parts market is starting to pulsate. However, the chemicals, plastic products and paper packaging markets continue to be described as unstable
Seventy-five percent of the metals buyers polled in February report higher prices compared to January. In fact, sales prices for such raw materials as steel, aluminum and copper are increasing drastically. So, manufacturers actually are backing off earlier forecasts of double-digit earnings growth in 2004, citing the rising cost and availability of steel, nonferrous metals and other raw materials.
Business opportunities are increasing for pressure vessels, "and we look to be busier than in the past two years," says a purchasing manager in Texas, "but there are concerns about material availability and increased cost of materials." The senior procurement manager for an Ohio-based supermarket chain says: "Steel drum manufacturers are demanding immediate price increases to offset skyrocketing steel and energy prices."
Most production-grade metals are somewhat short in supply, buyers say.
"We continue to have problems in getting castings," says a purchasing manager in Indiana. "A lot of this is primarily due to the fact that we have still seen more foundries close." And, with machinery manufacturing starting to perk up, buyers also are complaining about longer-than-expected leadtimes for clutches and couplings, fasteners and milled parts, hydraulic and pneumatic valves, springs, electrical products and variable speed motors and drives.
Outside metals, propylene chemicals and polypropylene resins are a supply problem, along with polyamide film and such chemicals as calcium chloride and methyl acetate.
Then there are supply issues with the occasional specialty item, as a materials manager in California reports: "We have a type of toilet paper holder we get from China, made of brass only. I placed a purchase order nine months ago and still have nothing, and I cannot find anyone else to produce this item."
Continued see link...
..http://www.manufacturing.net/pur/article/CA388198?industry=Business+Data&industr yid=21950 |
